Archana Choudhary

Business Strategy
Leads to

Dictate

Business Plans

Identify Review

Enumerat es

Performan ce Measures

Development Need

Tap Resource potential Requirements Attracts & retains Rewards and Achievements define Recognition

Outsource specialist Succession planning Enhances

Improved individual and Organizational Performance

Results in

Creates Shareholder Value

Hendry and Pettigrew (1986) put forward four meanings of SHRM:

1. The use of planning in human resource management 2. An integrated approach to the design and implementation of HR systems 3. Matching HRM policies and activities with the business strategy of the organization 4. Viewing people as a strategic resource for the achievement of competitive advantage

The major objectives of SHRM are as follows: To ensure the availability of a skilled, committed, and highly motivated workforce in the organization to achieve sustained competitive advantage. To provide direction to the organization so that both the business needs of the organization and the individual and collective needs of its workforce are met. This is achieved by developing and implementing HR practices that are strategically aligned.

SHRM Responsibility of HR Line managers; all managers programmes responsible for people are HR managers Focus on activities Employee relations -ensuring employee Partnerships with internal (employees) motivation and productivity, compliance and external (customers, stakeholders, with laws public interest groups) groups Role of HR Reactive and transactional Proactive and transformational, change leader Initiative for change Slow, piecemeal, and fragmented, not Fast, flexible, and systemic, change integrated with larger issues initiatives implemented in concert with other HR systems Time horizon Short-term Consider various time frames as necessary (short, medium, or longterm) Control Bureaucratic control through rules, Organic control through flexibility, as procedures, and policies few restrictions on employee behaviour as possible Job design Focus on scientific management Broad job design, flexibility, teams and principles-division of labour, groups, and cross-training independence, and specialization Important investments Capital, products, technology, and People and their knowledge, skills, and finance abilities Accountability Cost centre Investment centre

Traditional HRM Staff personnel in the HR department

Porter's (1985) Classification of Business Strategies

Type of Business Strategy Cost leadership Characteristics Examples

The firm increases its efficiency, Retailers such cuts costs so that products or as Vishal Mega services may be priced lower Mart than the industry average Assumes that a small change in price will significantly affect customer demand Assumes that customers show greater price sensitivity than brand loyalty-this is because the products/services of each firm are non-distinguishable

Type of Characteristics Business Strategy Differentiation The firm distinguishes its products/services from its competitors or at least attempts to make consumers perceive that there are differences The firm charges a premium for its products/services because it offers its customers something that is unique, extraordinary, or innovative Focus The firm recognizes that different The firm seeks to develop brand segments of the market have loyalty different needs and attempts to satisfy one particular group The firm can charge a premium for its services since the market has overlooked these market segments

Examples

Nike, Sony

Clothes manufacturer s that cater to petite women, restaurants that target only families

Guest (1989) emphasized that it is important to ensure that HRM is fully integrated into strategic planning. In 1997, Guest identified the following five types of fit:
1. fit as strategic interaction (best fit approach)-HR practices linkage with the external context 2. fit as contingency-HR approaches to ensure that internal practices of the organization respond to external factors such as the nature of the market, skill availability, etc.

3. fit as an ideal set of practices (best practice approach)-there are 'best practices' which all firms can adopt
4. fit as gestalt-emphasizes the importance of finding an appropriate combination of practices 5. fit as 'bundles' (the configuration approach)-suggests a search for distinct configuration or bundles of HR practices that complement each other, in order to determine which 'bundle' is likely to be most effective

Fit as bundles (configurati on approach)

Fit as gestalt

Fit Perspectiv e

Fit as strategic interaction (best fit approach)

Fit as an ideal set of practices (best practice approach)

Fit as contingenc y

HR Practices Corresponding to the Stages of an Organization's Life Cycle

Life Cycle Stages

Start-up

Growth

Maturity

Decline

HR Practices Flexible patterns of work Recruitment of highly motivated and committed employees Competitive pay Little formality No unions More sophisticated recruitment and selection Training and development Performance management processes Reward systems Focus on high commitment Developing stable employee relations Attention to the control of labour costs Focus on increasing productivity Strained employee relations Control compensation Emphasis on rationalization of workforce and downsizing Abandoning some longstanding practices to cut costs

Miles and Snow's Classification of Business Strategy and HR Strategy

Dominant Culture of the Organization (Business Strategy) HR Strategy
Bureaucratic approach Planned and regularly maintained policies to provide for lean HR Build human resources Likely to emphasize training programmes and internal promotion Creative and flexible management style Have high quality human resources Emphasize redeployment and flexibility of HR Little opportunity for long-term HR planning Acquire human resources Likely to emphasize recruitment, selection, and performance-based compensation Low levels of monitoring and coordination 'Buy' as well as 'make' key human resources Emphasize HR planning

Defenders
Find change threatening Favour strategies which encourage continuity and security

Prospectors
Thrive on change Favour strategies of product and/or market development

Analysers
Seek to match new ventures with the present business set-up These firms are followers-the ventures are not new to the market, only new to the firm

HR Scorecard
The HR Scorecard enables to do two important things manage HR as a strategic asset and demonstrate HRs contribution to the firms financial success. It should have four major themesI. The key human resource deliverables that will leverage HRs role in the firms overall strategy II. The efficiency with which those deliverables are generated. III. High performance work system IV. The extent to which this system is aligned with the Lagging Indicators for HR performance (I and II) strategy
Leading Indicators (III and IV)

HR Deliverables are of two categories Performance Drivers and Enablers

HR performance drivers are people related capabilities or assets such as employee productivity or employee satisfaction. These drivers are not generic, it is company specific.
Enablers are methods which reinforce performance drivers.

A single performance drivers may have several enablers.

Benefits of HR Scorecard
HR score card helps the organization to link people, strategy and performance. This ultimately adds value to the organization substantially. It reinforces the distinction between HR doable and HR deliverables. It enables cost control and value creation. It measures leading indicators. It assesses HRs contribution to strategy implementation and ultimately to the bottom line. It enables HR professionals to effectively manage their strategic responsibilities. It improves accountability of people. It enables to achieve the performance, which is the ultimate objective of the organization.